State of the Global Supply Chain Finance Market released UK & China Trade CorridorsMonday 8 April 2019
Trade Finance Global (TFG) today released its whitepaper, ‘State of the Supply Chain Finance Market, UK & China Trade Corridors’, in partnership with East & Partners, ICC United Kingdom and Coriolis Technologies.
The trade and supply chain finance sector has changed dramatically since 2008. A combination of new technology and a need to comply with more stringent regulation has led to a fundamental change in the role of the banks, as well as how trade finance solutions are delivered.
This whitepaper is our contribution towards this new and positive potential chapter in trade. By mapping out the pain points and areas that require development, we can look to resolve these issues as we transition towards a more inclusive system that works for everyone.
A global view on supply chain volumes shows that most (65.8%) come from cross border sales orders rather than domestic orders, and recent forecasts expected a growth of 1.1%. Leading markets are Hong Kong and Singapore each having over 90% of their supply chain volume in cross border sale orders, and closely following are Germany and the UK each with over 70%. China had the smallest volume with cross-border markets amount to 36.1% indicating its autarky in today’s globalised world.
Dr Rebecca Harding, CEO, Coriolis Technologies, commented: “China’s goods exports to the UK were worth some $58bn in 2018, and UK goods exports to China around $20bn. Much of this trade is in research intensive sectors like electronics and pharmaceuticals. The services trade has blossomed and amounted to $9bn in total in 2018, a rate of growth in combined imports and exports of nearly 7%. Financial services represent nearly 7% of this: the UK will export an estimated $441.5bn in financial services to China, and China will export some $53bn.
“Trade and trade finance are key. The value of the trade finance market between the two countries, including services, is around $77bn. Some $27bn of that is bank intermediated trade finance and $43bn open account trading.” Harding added.
Chris Southworth, Director General of the ICC United Kingdom added: “Traditional forms of trade finance and supply chain finance are no longer seen as separate but part of a range of potential choices and solutions. A new ecosystem of fintechs has filled the gap traditionally occupied by the banks, working in partnership to provide technology-led solutions connecting buyers, sellers and financiers – with much of the innovation being driven by the London-Singapore axis.
“We are at a critical moment in the history of trade. There are encouraging signs that we are on the cusp of unlocking access to new forms of finance that can fill the estimated US$ 1.5 trillion gap. The finance is there in the system but not in the right places – the challenge is to identify it and unlock it.” Southworth added.
The whitepaper outlined that for the trade and supply chain finance community, innovations in non-recourse receivables financing and off-balance sheet structures present new opportunities for corporates trading cross-border, and coupled with integrated systems and AI, China’s BRI presents a significant opportunity for UK corporates.
The political maelstrom in the UK caused by Brexit will not stop trade, technology or innovation, and no matter what the outcome of current geopolitical events are, global economies need cross-border trade in services, goods and commodities as well as a global workforce to thrive and succeed.
The full whitepaper, graphs and podcast can be downloaded from: https://www.tradefinanceglobal.com/finance-products/supply-chain-finance/uk-china-scf/
Key Facts: UK and China Trade Corridors
- China’s goods exports to the UK were worth $58bn in 2018
- UK goods exports to China were worth around $20bn in 2018
- Electronics, pharmaceuticals and services were the biggest trades
- UKexportsaround$441bninfinancial services to China, China exports some $53bn
- The trade finance market between the UK and China is around $77bn
The insights reported above are from the following East and Partners reports.
- 2019 European Supply China Financing Report - This report was produced by East & Partners to provide ‘voice of the customer’ insight for BCR’s Supply Chain Finance Global Summit, that took place in Amsterdam in December 2018. Working with a panel of senior supply chain finance bankers, convened by BCR from Citibank, HSBC, Lloyds, NatWest and Santander, key customer questions were identified and compiled into the fieldwork questionnaire. East then conducted direct interviews with key decision makers from the top 100 multinational corporates in the UK, France and Germany amounting to a total sample size of +/-300 interviews (+/-100 from each market).
- 2018 BCR China Supply China Financing Report – The insights above are from this report produced by East & Partners to provide ‘voice of the customer’ insight on Supply Chain Financing in China. East conducted direct interviews in September 2018 with 91% of China’s top 100 revenue ranked corporates.
- 2017 Global Supply Chain Finance Report - This research is based on primary research conducted by East and Partners in the 1st calendar quarter of 2017. A total of 736 top 800 global corporates were directly interviewed by East and Partners. All interviewees were involved in importing, exporting or both across Australia, Canada, China, Hong Kong, Singapore, UK and USA.
About ICC United Kingdom
The International Chamber of Commerce (ICC) is the largest world business organisation representing 45 million companies and 1 billion employees in over 100 countries. The ICC represents business at inter-governmental level and is the only business organisation with UN Observer Status. Working with organisations such as the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC) and the Federation of Small Businesses (FSB), the ICC United Kingdom supports British businesses so their voices are heard by the United Nations (UN), G20 and World Trade Organisation (WTO).
About Trade Finance Global
Trade Finance Global (TFG) assists companies with raising debt finance. Whilst TFG can access many traditional forms of finance, it specialises in alternative finance and complex funding solutions related to international trade. TFG helps companies to raise finance in ways that is sometimes out of reach for mainstream lenders.